THE ORDINANCE ON COMPANIES AMENDMENTS, 2018
On 2nd November, 2018, the President of India promulgated the Companies (Amendment) Ordinance, 2018. This was done with the objective to amend certain provisions of the Companies Act, 2013. Over 30 amendments have been proposed through this Ordinance.
A look at some highlights:
With over thirty amendments proposed through the Companies (Amendment) Ordinance, 2018, the government’s sole objective has been to improve the level of compliance in the corporates and also ensure smooth corporate governance. The amendments have been based on recommendations made in the "Report of the Committee to Review Offences under the Companies Act, 2013". By decriminalizing more than 80 offences, the government aims to reduce the burden of routine compliances by the NCLT and other jurisdictions. The Registrar of Companies and the Regional directors have been vested with additional powers. The system of e-adjudication for routine / less serious offences has also been proposed for the first time. In all, the ordinance is another step towards ease of doing business and effective corporate governance.
The Juvenility of Justice
In August, 2018 the government passed the Juvenile Justice (Care and protection of Children) amendment bill, 2018 in the Lok Sabha. The amendments seek to plug the inordinate delays in the adoption process by empowering district magistrates to pass orders for such adoption. This would ensure that timely adoption and protection and care of such children. While it is pending in the Parliament, a look at the legislation.
The Juvenile Justice Act is a central legislation that was enacted in 1986. The objective was to provide a uniform Law on juvenile justice across the country. Prior to that each State had its own regulations which gave rise to several discrepancies in the way juveniles and juvenile crimes were interpreted and treated. The Constitution of India contains several provisions protecting children and their rights –prohibiting child labour and employment upto 14 years of age; preventing children from working in hazardous situations; right to free and compulsory education; protection from sexual abuse to name a few. The juvenile justice laws categorized the children into two main categories: those in conflict with Law and those who required care and protection.
The Juvenile Justice Act, 1986 contained provisions for almost all the above and also dealt with treating delinquent juveniles who were accused of committing crimes at their young age. It was enacted for protection, development and treatment of neglected juveniles and delinquent juveniles. However there was major concern in the way juveniles were being interrogated, tortured and tried for such cases. It then got replaced with the Juvenile Justice (Care and protection of children), Act, 2000.
In 2012, the horrific and brutal Nirbhaya gang rape case brought back in to sharp focus the need for more stringent Juvenile laws. One of the perpetrators of the crime was not even 18 years of age. He was tried as a juvenile delinquent and sent to a reform home for 3 years. This outraged the sensibilities of people across the country. By treating him as juvenile and sending him to a reform home, it was felt that it indirectly encouraging youngsters to commit crimes. Also “reform” did not justify the brutality of the crime.
Consequently, amidst intense debate on human rights / child rights violations and protests from across the country the Juvenile Justice (Care and Protection of Children) Act, 2015 was passed by both houses of Parliament and came into effect in December, 2015. A host of stringent measures were put in place to revamp the existing Act – Minors in the age group of 16 -18 years were to be tried as adults if they committed heinous crimes. Anyone between the age group of 16-18 years committing a less serious offence, were to be tried under the criminal justice systems if apprehended after they attained 21 years of age. A juvenile justice board (comprising also of sociologists and psychologists) would analyse and examine if the crime was committed by a child or an adult. The Act also streamlined the adoption process of orphaned and abandoned children. The Act also introduced the concept of foster care of children in India where families willing to take care of abandoned or orphaned children will be monitored by the government and also receive financial assistance. The 2015 Act also expressly stated punishments for persons selling children, selling alcohol or drugs to children and those giving corporal punishments to children.
The intense criticism of the Bill that eventually became an Act in 2015. For the first time in the history of India the Judicial waiver system was introduced – a process where a juvenile can be tried under the adult criminal justice system and meted punishments as an adult. Human Rights/ child rights activists, politicians and social activists were of the view that most juvenile delinquents were from the economically weaker, illiterate and deprived sections. Hence they required reform, rehabilitation and education and not punishment. However an equal number of people were of the view that stringent punitive measures and punishments only could deter a child, adolescent or youngster from committing a heinous crimes such as rape, murder and even terrorism. It is only when a child is condemned the very first time, they will not become habitual offenders.
It is an emotional issue as children and youngsters are involved. Their juvenility is weakening thanks to their very early exposure to adult content – porn and violent crimes on the internet, television and mobile phones. A child clearly seems to need no education to get access to them and also find their ways using such devices to their convenience. While recent reports suggest that heinous crimes such as rape, murder and online threats and kidnapping being committed in the age groups of 16-25 years, only a balanced law- one that contains reformative cum punitive measures that will ensure child rights are not violated. It is not only the role of the governments in reforming delinquent offenders, it is the role of the family and society at large to ensure a healthy environment in the first place to prevent the juvenile from becoming a delinquent juvenile.
CIRCULARS & NOTIFICATIONS
Live streaming of Supreme Court proceedings in cases of constitutional and national importance –Article 145 of the Constitution of India
Landmark Judgment by the Supreme Court of India
Swapnil Tripathi Vs Supreme Court of India and Indira Jaising Vs Secretary General & Others
In yet another historic Judgment, a three Judge Bench headed by the (now retired) Chief Justice of India Dipak Mishra ruled in favour of providing virtual access to courtroom proceedings in matters of Constitutional and National importance. This was after a petition filed by a law student and other petitions filed by senior advocate Indira Jaising and the NGO, Centre for Accountability and Systemic Change. The Supreme Court allowed live streaming of proceedings into the hitherto opaque / closed door proceedings. The Court also ordered that to make meaningful and effective the process of live streaming of proceedings, the Advocates and Judges involved must use microphones.
Attorney General of India K.K. Venugopal, on whom the Supreme Court relied on in this case, had suggested that the live streaming be introduced as a pilot project in the Apex Court and depending on its success, be implemented in other courts across the country. A few guidelines were also suggested in this regard:
The Judgment is bound to have positive impact on the minds of the people as the Supreme Court proposes to virtually throw open its hitherto opaque doors. While this will bring in greater transparency and let the public get first information on happenings in important cases, it will increase the faith of the litigants and general public in the judiciary. This is very much the need of the hour. In the words of the Supreme Court – “Sunlight is the best disinfectant”.
Ubi factum nullum
Where there is no principal fact, there can be no accessory
In the civil law, exemption; immunity; privilege; dispensation; exemption from the burden of office
One in which the parties stipulate that they shall gain or lose, upon the happening of an uncertain event, in which they have no interest except that arising from the possibility of such gain or loss
The Paper Chase (1973) (Movie)
Based on the 1971 novel of the same name, the movie, which was later adapted into a TV series deals the coming of age of a first year student at Harvard Law school – James Hart, played by Timothy Bottoms. His experiences with his imperious Contract Law professor Charles Kingsfield (John Houseman) at law school and later an “on – off” relationship with his daughter (Lindsay Wagner) forms the remaining story. The movie believed to be the first of its kind that dealt with the harsh realities of legal education, educators and pressures of standing out (as against those who didn’t) had many interpretations of whether it developed them intellectually through law school and life. The movie earned an Academy award for best in a supporting role to John Houseman who played the role of a brilliant and stern Contracts Law professor who uses methods such as Socratic method of constructive arguments with student that ends up shredding their ego to pieces. A must watch for all especially law students.
An innocent Client – Scott Pratt (2008)
(Book / Novel)
This book is the first novel of former attorney Scott Pratt who very recently passed away in a diving accident. Having become a full time writer since 2008, Scott published a series of legal fiction based on crimes in East Tennessee. His main character – Joe Dillard, an attorney believed to be the book version of Scott himself.
Touted as a brilliant debut novel by book reviewers, the story is based on Joe Dillard a jaded criminal defence lawyer on the verge of quitting practice, in the hope of representing someone who may be actually innocent before he quits. A preacher is found brutally murdered in a Tennessee motel and a beautiful waitress is suspected to have murdered him. The clubs owner hires Joe to defend his waitress. How Dillard puts aside his chaotic personal life to rise up to his professional commitment forms the rest of the story. Scott Pratt was particularly appreciated for his portrayal of strong women in his stories. Read on. Find out.
Harvey Birdman, Attorney at Law (2000-2007)
With a total of 39 episodes, this TV series is based on a law firm that hires ex-superhero Harvey T Birdman working as an attorney alongside other cartoon characters from the 1960’s and 70’s. Based on children’s cartoons, it was an American adult animated television series featuring legal superheroes with eccentric and comical qualities.
Don’t let the behaviour of others destroy your inner peace
– Dalai Lama
© Copyright 2018 - A K Mylsamy & Associates LLP
1. Declaration on Commencement of Business
Companies with share capital incorporated on or after 2nd November, 2018 have to file a declaration within 180 days from date of incorporation that (i) all subscribers have paid their subscription money (ii) company files details about the registered office of the company within 30 days from date of incorporation.
This compliance requirement which was hitherto done away with has been restored.
2. Additional ground for removal of Company name from Register of Companies
In the event the above two conditions have not been fulfilled by the company, the Registrar of companies has been empowered to remove the name of the company from the Register of companies. The registrar of companies is also empowered to physically verify the address of the registered office.
This compliance requirement is aimed at identifying shell Companies.
3. Disqualification as director for holding Directorship beyond the permissible number of companies
As required under Section 165(1) of the Companies Act, 2013, if a person is a director in more than 20 companies, then he/she will disqualified to be appointed as director in accordance with S.164(1) (Disqualification for appointment of director) of the Companies Act.
This compliance requirement is aimed at better corporate governance.
4. Time limit for Registration of Charges
All charges created on or after 2nd November, 2018 have to be registered with the Roc within 30 days of creation of charge. An additional time period of 60 days is given upon paying additional filing fee. The Registrar may, upon an application from the company allow within a further period of 60 days.
A time period of upto 300 days (after the 30 day period was hitherto allowed). consequent to the amendments, after 120 days, a charge cannot be registered.
5. Reducing the burden on NCLT
These amendments have been introduced with the intention to de-clutter the routine work load on the already burdened NCLT and ensure their focus on more serious offences and speed up the resolution process.
6. Revision in penalties
7. Significant Beneficial ownership
In the event of the failure or incorrect disclosure of shares, the NCLT has powers to impose restrictions on such shares. If the company does not petition before NCLT within 1 year for removal of restrictions, the NCLT has the power to transfer such shares to Investor Education Fund account.
While the implementation of the section has been put on hold, the proposed amendments aim to make stricter the implementation of the Significant beneficial ownership rules.
8. Corporate Social Responsibility
The amendments propose to make it mandatory to transfer such unspent amount to a separate bank account called the “Unspent CSR account” and the amounts have to be spent within 3 years from date of transfer to such account.
The Act prescribes specified companies to spend 2% of the average of three year net profits in CSR activities. While it is not mandatory to spend it, it is mandatory to report the same to the RoC.
The proposed amendment indirectly makes it mandatory to spend the CSR amount within the prescribed time limit.
9. Cap on the remuneration of independent directors
The amendments propose to cap the remuneration (excluding sitting fee) to 25% of the independent directors’ total income. Fees earned by rendering other professional services to be maximum of 10% of such income.
While the amendment is aimed to maintain highest level of independence, there could be practical issues in calculating such incomes.
Idea Estates Private Limited v. Enriched Restaurants Private Limited 21 /2018 in IB no. 181 / 2018
Non-compliance with the settlement does not give rise to contempt proceedings
Aditya Raheja v. Heritage Marble Private Limited & Anr. 248 / 2018
Appeal admitted noting a dispute regarding the invoice
Mr. Rajinish Gupta v. Small Industrial Development Bank of India 126 / 2018
Authority authorised as per regulation 10 and 11 of SIDBI is eligible to file an application under Sec 7 of the code
R.C. Dhandapaani v. Vengarai Seshadri Sowrirajan & Anr. 391 / 2018
Appeal dismissed as the Promoter was ineligible to file “resolution plan”
M/s. Sunil Sunderlal Luhar v. Indian Bank 137/2017
Application admitted noting the overriding effect of IBC